Good day, ladies and gentlemen, and welcome to the TripAdvisor's Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Will Lyons, Senior Director of Investor Relations. You may begin.

Thanks, Abigail. Good morning, everyone, and welcome to TripAdvisor's Fourth Quarter and Year-End 2015 Earnings Conference Call. Joining me today are Steve Kaufer, our CEO; and Ernst Teunissen, our CFO. Earlier today, we distributed our Q4 earnings release on our Investor Relations website located at ir.tripadvisor.com. In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. Also on our Investor Relations website, you will find supplemental financial information, which include certain non-GAAP financial measures discussed on this call as well as other performance metrics. Before we begin, I'd like to remind you that estimates and other forward-looking statements included in this call represent the company's view as of today, February 11, 2016. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release and TripAdvisor's filings with the SEC for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. Finally, unless otherwise stated, all comparisons on this call will be against our results for the comparable period of 2014. And now, I'll turn the call over to Steve.

Thank you, Will, and thank you everyone for joining the call. TripAdvisor is rapidly building the best end-to-end user experience in travel, helping users plan and book the perfect trip is our north star and 2015 was the foundational year end pursuit of this mission. We are reinventing how users book and have awesome trips. Think about how it's been for the past five to 10 years. You've gone online, you've likely searched on TripAdvisor, you've looked on search engines, you've searched destination sites, you've traveled on booking sites, you've checked supplier sites. At the end of it all, you've searched at least 15 to 20 different sites to try to figure out where do you want to go, where you're going to have a great time, where you're going to stay, how are you going to book it and then you've got to go do the whole search all over again to go find the best price and feel safe about where you're booking. At TripAdvisor we have sought to solve these inefficiencies in that travel booking journey. Recently, we've done this in three ways. First, we've widened our content mode, reinforcing our leadership position is the most trusted brand in travel research. Since 2011, network effects have intensified as user content has accelerated from 30 contributions per minute to more than 200 per minute. In 2015 alone, users added 82 million contributions on TripAdvisor, and we now offer users 320 million reviews and opinions on 6.2 million businesses around the globe. Second, in 2013, anticipating change in consumer preferences, we added Hotel Metasearch enabling users to find all the best prices for more than 200 different booking engines across the web. And third, over the past couple of years, again anticipating consumers growing desire to transact in a…

Thank you, Steve, and good morning, everyone. My first three months on the job have allowed me to understand our business close up and what strikes me is that while the company has achieved so much in its short history from Steve all the way down in the organization, the company is deeply committed to make sure our future is even better still. This commitment to improve and willingness to adapt to achieve greatness is very unique to our company culture. When I look at the $1.3 trillion travel market and I compare our TripAdvisor's significant influence on travel commerce with how under monetized we are, I see a massive growth opportunity ahead. We're experiencing near-term headwinds as we roll out instant booking. But once we've established our end-to-end product offering, we have positioned ourselves to drive growth and better monetization in the future. With that as a backdrop, let's review our Q4 and our full year 2015 results. First comment is that our financial results should be viewed in light of significant currency headwinds. Full year 2015 revenue grew 20% in reported currency versus 27% in constant currency. And adjusted EBITDA was flat in reported currency versus 14% growth in constant currency. Q4 revenue grew 7% to reported currency or 12% in constant currency and adjusted EBITDA growth in Q4 was negative 11% in reported currency versus negative 2% in constant currency. Note that our Q4 GAAP net income of $3 million or $0.02 per diluted share was largely impacted by a one-time non-cash item to settle our pledge obligation with the TripAdvisor charitable foundation. A total of $67 million was paid in company common stock. This one-time settlement means that moving forward, we will not contribute part of our profits to the foundation which will be a net…

Thank you. [Operator Instructions]. Our first question comes from the line of Lloyd Walmsley with Deutsche Bank. Your line is open.

Thanks. I guess first just I think if I heard you right, you said the instant book headwind in the fourth quarter was only 9 million versus 10 million last quarter despite having it rolled out across the entire quarter. Can you just talk about what drove that improvement, was it take rate driven, was it conversion driven? Can you give us some color there; I guess that's the first question I have.

Yes. Lloyd, I'll take that question. What you do have to keep in mind is that Q4 is a smaller quarter than Q3 of course and you have to look at the gap in that line. But we are seeing as I was highlighting, we are seeing improvements in our instant book business that we believe will overtime help us reduce that monetization gap I highlighted continued improvement in conversion rates, improvement in the average booking value of the business. And so despite the fact that we're rolling it out further and our instant book revenue as a percentage of our total revenues is increasing, we are able to maintain a similar type of headwind.

Great. And as a follow-up I guess when you look at kind of other international markets like EMEA on a revenue per user basis, it’s a fraction of what North America is. Can you just talk about how much of that is the lower monetization of hotel shoppers versus just a traffic skew away from hotel shoppers more towards the other that might explain that and kind of is instant book when you look at there is early international markets, is it less of a drag relative to meta, was there kind of a bigger opportunity there?

Yes, if you look at EMEA, the only market where we rolled out instant book in 2015 is the UK. And so that’s a very dilutive impact on the total EMEA number that you look at. But our monetization, our revenue per shopper outside of the United States is lower, which is driven by lower CPCs in those markets.

Thank you. Our next question comes from the line of Mark Mahaney with RBC, your line is open.

Two questions, please, if you could just comment on whether you’re seeing any macro drags in any of the international markets? And then any updated thoughts on brand awareness, TV advertising, campaigns in the last quarter, I think you decided to kind of trim that back a little bit, is that still the same or in terms of the expense guide for this year being greater than revenue guide, is there a rethink on the usefulness of running a broader TV campaign? Thank you.

I'll take the first question - and give the second to Steve. In terms of the macro in the fourth quarter, we saw some impact from the Paris attacks we believe, in order of magnitude, impacted our fourth quarter revenues by 1.5% to 2% of our revenues into January. We don’t see a discernible impact of the macro environment, but we’re keeping our eye on it very closely obviously.

This is Steve. On the TV branding campaign as I indicated before, we planned to pull back on that or separately focused instead on the traffic that’s already on our side, because we have so many hotel shoppers that are already in the intent to purchase and in many cases the booking path, so turning our sites on converting those folks rather than a broader-based campaign.

Thank you.

Thank you. Our next question comes from the line of Eric Sheridan with UBS. Your line is open.

Thank you very much. Just maybe one on the theme of conversion, you talked about conversion now being comparable to meta, what have you seen over the last six months in the improvements, in conversion maybe you can tease out a little bit of how desktop versus mobile has evolved and what some of the partnerships that have come in like Marriott and price - meant for those conversion improvements and how we should be thinking about conversion going forward? Thanks.

Clearly, the huge impact on conversion for us was being able to bring on over the course of 2015 all of the - or almost all of the big brands and the whole Priceline Group bringing their very strong inventory, excellent content and great pricing. So, it really kind of up the opportunity for TripAdvisor to be showing a great price with all this content. Very hard for us to tease out exactly what causes conversion rate to lift, but we're confident in saying the extra or the better content that we added to the site certainly helped. As we look forward, it’s mostly tuning if you will, there is a lot of properties that are available, we want to make sure that we have great pricing on as many of them or all of them as we can, we want to make sure we have a great experience in terms of someone entering the booking flow and getting all of the information that they need in order to make that in order to trust us with their credit card, or storing their credit card, so we’re doing all of the things and that’s why we're seeing the improved rate, I’m not sure I would point to a single big win factor that’s going to be out there versus incremental improvement and I said, the incremental improvement will likely translate to all points of sale at the same time. We’re not seeing a big difference per market in terms of how consumers are behaving. Conversion, you asked about the phone versus desktop and so the conversion naturally is different, some of that I believe is going to be structural for quite some time. Both we measure when we talk about rev per shopper with you folks, we are also of course measuring it both mobile web, mobile app, tablet, desktop. We've got to broken down in lots of different ways here and we're constantly making improvements in each of those categories.

Thank you. Our next question comes from the line of Chris Merwin of Barclays. Your line is open.

Great. Thank you. I just had a couple. One of the changes that you made in instant book is to feature the brand of your partners in the booking process. So what is the feedback then from your partners' to-date in terms of their satisfaction with the product? And you talked a bit about how the repeat booking rates are getting better. So does that mean that you're starting to see some of these repeat economics accrued at TripAdvisor rather than necessarily the supplier. And then just a second question as you roll out instant book internationally, have you been able to get all the content you need globally especially after the Priceline deal to drive further improvements in conversion and maybe relative to the domestic growth, can you just tell us a bit about how the international rollout has been performing at this stage of the game. Thanks.

So, I'll go in reverse order. We're very happy with the Priceline deal, the content that it provides, the pricing so, and their ability to handle the infrastructure of the payments in all these different countries. And as I alluded to last quarter, we thought that would allow us to roll it out fairly quickly and we've delivered on that. Priceline team has been great to work with. So, as you know, as we disclosed, we launched in Europe launching LatAm and another market. So that will mostly be done over the next 90-120 days. So, that's great. It absolutely was the meaningful factor and us to accelerate our global rollout, which kind of starts the training purpose or training clock going, because we know we have a hill to climb, teach people that TripAdvisor is not only awesome for research, but a safe place to book and by offering great content, great prices, we think we are doing that where it's available. So, we're not doing that yet in a bunch of countries because we don't have any instant booking rolled out in those countries. So, if you think that half a little bit, when we look at this consumer journey, I talk about instead of searching around lots and lots of different sites for all the information and then all the prices. Our vision, our strategic plan here is you come to TripAdvisor because of all that great content, and then of course you see that we've done the work for you, we've searched the web, we've pulled back all of these prices and with instant booking, odds are good and becoming great that we'll be able to feature the lowest price if you want to book on TripAdvisor, if in fact you have royalty to a different…

No, I think it was mostly, it was just really on, I guess maybe the pace of the international rollout relative to domestic, just how that's going so far if it's kind of on the same trend line.

Well since we already rolled out in all of our English markets, or rolled out U.S., UK first and that’s a lot of our traffic. We were able to test a lot of the scalability question marks that we had and kind of we passed those and that was a slower rollout as we went to a percentage of traffic and then as we roll out to the rest of the world, we’re a lot more comfortable that our infrastructure can handle the load and so we tend to roll out quicker, again as an example in the past 45 days rolled out to, it's probably a dozen more markets since the beginning of the year and as I indicated we expect the pace to continue with that rate such that it’ll be out in the next quarter or so, with all or almost all of our major markets. Product looks good. There is - when we say we launched it, it gives us instant booking capabilities, primarily with booking.com as our partner and then we are working aggressively to bring the rest of our suppliers, all the different brands and obviously the independents to all these new markets. One thing that slows us down is that for some of our partners we don’t have all of the room content in the language that we’re rolling out in, so we need to go back and get that before we can turn some of those partners live. When I talk about it being a year or two to get instant booking to really be fully rolled out with all of the value that I talked about all the room content, all of this pricing it’s because there is a lot of work still to be done to get all the partners with all the content and all the languages, handling payments in all the markets and we’re on that road and we’re accelerating our pace.

Thanks, Steve.

Thank you. Our next question comes from the line of Ken Sena with Evercore. Your line is open.

Hi. Thanks. When Expedia reported yesterday there was a mention that Airbnb in the margin is a positive and I was just wondering if you’d agree with that statement in terms of what you’re seeing? And also you mentioned, speed a few times in the slide, there was a mention of the mobile product as being the perfect travel companion. How pleased are you with the current mobile experience from a product standpoint? And are you concerned at all by some of the recent iterations that you’re seeing from Google on the SEO side? Thank you.

Sure. I mean Airbnb offers an interesting product. We have a very competitive product in that space. But we come at it more from a - look the individual who is looking for a great place to stay in London and they might pick a hotel, they might pick an apartment, they might pick even a more traditional vacation until our supply footprint covers them all and we’re growing that around the globe. So in the sense Airbnb as a competitor, we don’t particularly view their traffic or the person looking for the shared room with someone that’s actually on TripAdvisor, but for the other piece for the city or for the urban inventory we do. Hard to say given the strength of the hotel industry currently that Airbnb is a problem, they've just added a lot of supply into the equation and I personally believe that they’re generating more travel on the part of consumers because of the supply that they’ve added. I have no data point to back that up, but it’s kind of logical to me as they continue to grow but the hotel companies and folks like us and the others, other OTAs continue to be very strong in our markets. In terms of the mobile experience, the tough question there is various aspects of our app and our experience that I think are just terrific. You can find great places to eat nearby where you’re standing, all around the globe, you can book the hotel, store to your credit card, it's two clicks and you’re done. There is tremendous amount of benefit that we've achieved I believe by delivering a great user experience for closing hotel shopping, places to eat, things to do, bringing the book ability of our attraction inventory on the phone, really, really nice. From - is there more to do? Absolutely I just think that the amount of data that TripAdvisor has that can help you plan a trip that is so hard for us to figure out how to surface at the right time, really hard to read your mind to know what you’re going to be looking for next. But we've got it. Because we have so much users, so many users, we have so much data on all topics related to travel plus we've got the community standing behind us. So do we bring that all to the forefront in a perfect way on the mobile small screen? No. So, I still think we are in very early days and we can do that we are incredibly well positioned because of the rich content across all travel categories and because of our installed app footprint, which is as you know just huge. So, it's a way more opportunity ahead of us than we have tackled already.

Thank you. And just maybe anything on the Google front in terms of the micro moment and some of the recent iterations that they have been making there?

Sorry, we certainly keep an eye on them. But, we never are able to detect whether their products have an impact on our business, we're at such scale and that's a very recent release on their part. So, there could be a factor at some point down the road who knows I think I've said that to 8 or 10 different Google product iterations over the past decade, then my answer is still the same.

Thank you. Our next question comes from the line of Robert Peck with SunTrust. Your line is open.

Thanks for taking my question. Two quick questions if I can. One, hotel shopper growth decelerated in the quarter a little albeit of a much tougher comp. Steve, as we think about that going forward, how should we think about modeling that going forward, what expectations would be there and Ernst on M&A you've talked about that a little bit today. I know you can't see what you would acquire. But as you look at the portfolio of assets you have, can you just give us directionally some area that are more interesting than others? Thanks so much.

I'll take both questions. So, on the revenue per shopper, as you pointed out, we did decelerate in Q4 on revenue per hotel shopper. In total, revenue per hotel shopper declined by 12% and there is a couple of things, if you unpack that and if you think about modeling that for the future, there is a couple of things going on there. One, important driver is currency which had a significant impact on that in the fourth quarter in particular. The second factor we have to consider is that this is an aggregate number across all devices and our mobile revenue per shopper is growing much more quickly. Sorry, our number of mobile shoppers is growing much more quickly. So, you get a mix shift which drags down the average. Having said that, we are very seriously improving our revenue per shopper in mobile. In constant currency terms, in 2015, we improved revenue per shopper and mobile buy about 30%, so we're improving, but it's still significantly lower monetization than desktop, which is a negative impact. And then we had of course instant book in the fourth quarter which also negatively impacts that as revenue per hotel shopper growth. So, as you think about that going forward, we do expect further pressure on for if you just aggregate now the desktop revenue per hotel shopper and the mobile revenue per hotel shopper, particularly on desktop, but also on mobile, we expect a negative pressure on that in the first half before the growth rate improves again on that revenue per hotel shopper.

I'd just pop in for a second. To the part of the question on the kind of absolute number of hotel shoppers, it's clearly growing stronger on the phone. We're not projecting a lot of growth going forward on the desktop, tablets, simply because the user behavior is shifting. When we look at modeling going forward, it's tough for us to do as well. But, I would point out the cycle if you will of as our revenue per hotel shopper improves, we are able to acquire more traffic on ours for breakeven traffic basis and of course we're always trying to acquire more hotel shopper traffic growth. Simply put if we make more money per hotel shopper visitor, we can bid more on search engines and other traffic generating sources. So, some of the decline in the hotel shopper absolute number in Q4 would be related to our lower rev per shopper number, which in term means we were able to buy a bit less, as that flips around second half of next year or whenever it does you’ll get to see some of that growth reappear.

And this is Will let me jump in on the revenue per hotel shopper growth because there are some questions coming in, just note that revenue per hotel shopper is a TA number, so we are taking the hotel shoppers from TripAdvisor, not including the hotel shoppers from our subsidiary sites, whereas if you’re doing the math on the supplemental style, you’ll be using TripAdvisor hotel shoppers and if you’re dividing the revenue from a consolidated basis you are including subsidiary revenue so just keep that in mind as you’re looking at that ratio.

Thank you. Our next question comes from the line of Tom White with Macquarie. Your line is open.

Great. Thanks for taking my question. Just a clarifying sort of definitional question. When you say that conversion rates on instant booking a comparable to meta what exactly do you mean that, does that mean that it’s comparable to kind of downstream conversion that your partner resulting from meta clicks? And then just also in terms of the impact of instant booking on meta know that you’ve got a bit more data are you seeing any signs that kind of your highest quality users the ones that are kind of closest to converting are disproportionally entering the instant booking funnel, potentially at the expense of CPC pricing in the meta auction if that’s kind of where the lower quality or sort of left by the way to convert users are going, just trying to get a sense of maybe any changes to CPC pricing in the meta auction? Thanks.

Sure. So yes, from the definitional perspective, when we talked about ID conversion, it’s folks that enter our booking funnel and come out the other end as the transaction compared to meta, we send the click off to a partner and some of those partners we have some conversion related information, so we can tell what percent of leads we sent turn into a transaction. So, right we say it’s comparable, it varies a lot of course type of property, point of sale, given time in year, so we’re just trying to point out that we’ve achieved comparable to meta.

And to your second question what trends do we see within? It’s a little bit early to say exactly what trends we see of or which type of users would migrate from meta to instant book, but it’s something we are watching quite closely. You’re by the way identifying also why we are really focused on the aggregate revenue per shopper improvements because some of this interplay between Meta and instant book are a little bit more complex and you may think of the surface.

Great. That’s helpful. And then just one follow-up on the conversion rate issue, Steve is it fair to think that you guys could actually get instant booking conversion rates that are higher than kind of the downstream conversions in meta just based on the fact that there is one less kind of step, you don’t need to click off and kind of the opportunities to drop off the funnel in meta? Thanks.

Sure. In some cases, a lot has to do with the user intents, right so. We presume our big meta partners have a lot of user intent that says, hey I'm going to their site and I'm ready to book, so they drive right through the funnel conversion rate very high. We have some percentage of our traffic coming to TripAdvisor, arguably most of our traffic I mean the TripAdvisor right now with high research intent and we’re pulling through the funnel and get them to click off to a partner sometimes they convert. If we’re able to train folks to come to TripAdvisor when they are ready to book, then we believe more likely to go down the instant book pass or conversion rate would be higher than our average traffic we sent off to meta. Yeah that’s a very believable, very it’s a thesis that we’d love to prove to be true sooner or rather than later. I wouldn’t say it makes our Meta leads any less quality, I think it’s just a testament to that, we can successfully be driving a higher intent purchase to TripAdvisor when they’re ready to do that booking.

Thank you. Our next question comes from the line of Heath Terry with Goldman Sachs. Your line is open.

Great, thanks. I was wondering if you could just give us a sense of as you present more of the sort of dual track options within your search result giving people that option of choosing between meta and instant book on desktop, can you give us a sense of what proportion they’re sort of choosing each one of those options and as you’ve added more partners within instant book to the extent that is having any impact on the way that the customers or the rate of customers are choosing instant book versus meta?

Well, we have a lot of options there. So, the display that you currently see on our site, I can almost promise you it will change somehow at some point because we are still iterating. What you are referring to I believe is what we internally call the distribution, so when someone is looking at a hotel page what percentage of clicking on instant book versus top meta offering versus the second, third, et cetera. And so majority of the clicks are still going into the meta flow versus instant book on average, and we don’t necessarily view that as a bad thing for where we are today. We know we can influence that a lot depending on how we choose to present instant book as an option. We do carefully measure I don’t disclose but we carefully measure the conversion rate for instant book when our presses are as good versus not as good versus better than meta options and you can imagine that has an impact and when - and the biggest thing that we can do to your question is to actually get instant booking available on more of our properties in more markets than sort of build more or partners underneath the instant booking placement. So in the U.S. for instance, we have really coverage right now, you look at most any city for most any hotel and there is probably, if it’s bookable online, there is probably an instant booking option because we have a good selection of partners between the brands and the OTAs, that is good in one of our newer foreign language markets because we don’t have some of that level of content yet.

Great. Thanks, Steve.

Thank you. Our next question comes from the line of Brian Fitzgerald with Jefferies. Your line is open.

Thanks. As you introduced new formats like meta or instant book, hotels, marketers that’s become familiar and comfortable with the new format, then kind of integrated their campaigns and for that matter hotel shoppers due to become comfortable with it. Could you maybe compare and contrast the meta ramp versus instant book ramp from this regard, any insights there with our lessons learned as you rolled out meta that are making the instant book ramp or rollout to be more efficient? Thanks.

Excellent question, - rollout some of those challenges were more gripping by our client’s ability to upgrade or change their bidding mechanism and styles and measurement based upon what we were doing and we have a lot of partners a lot of clients so we kind of they all have to move forward on the change. With instant booking, a client who has an instant booking partner has to do a decent amount of or some technical work to get integrated but it doesn’t really have much of an effect on all the rest of the partners. So, all the rest of the meta partners, the rollout scheduling timing is much more under our control because especially with the Priceline Group now, you can basically rollout in just about any market that we want to and we don’t need the other partners to do any technical work. So, lessons learned, look with the meta we needed to give our partners more warning, more sample, more time, a bunch of things, but it doesn’t apply quite as well to the IB [ph] rollout here. To the question of users changing the behavior, well I think it was lot - meta was lot easier on the users back then because they put in their dates and they just got more information. Hip, Hip Hurray. Here, we actually have to teach them what this book on TripAdvisor button means because it's not the site, it's not what they're used to getting on our site and that's new ground for us and you were doing a bunch of stuff right then I'm sure, I know we will be doing a bunch of stuff differently in the coming year to help drive home this new functionality and the benefits our travelers will receive when they experience instant booking.

Great. Thanks, Steve.

Thank you. Our next question comes from the line of Jed Kelly with Oppenheimer. Your line is open.

Great, thanks. Can you provide any color on how much revenue Viator revenue contributed to 2015 and give us a sense on how you expect Viator to grow in 2016? And then any chance to introduce instant booking to China outbound travelers through Priceline's investment Ctrip?

I'll take the first one. So we don't break out within our other segment which comprises of Viator but also the fork and our vacation rental business. We don't break out separately the revenues. But Viator is a healthy part of that and it also has very healthy growth rates within that. This is much we want to say about that.

In terms of China, when we talk about the global IB roll out, China is certainly included in that. We have a deal with the Priceline Group which has tremendous amount of global inventory as well as inventory inside of China directly through Priceline and the ability to transact. So we actually don't need an additional relationship with Ctrip in order to provide instant booking for Chinese travelers, domestic or international. Although obviously we would welcome additional instant booking relationships with every OTA including Ctrip all around the globe.

Thank you.

Thank you. And that does conclude our Q&A session. I'd like to turn the call back to Steve Kaufer for closing remarks.

Great. Well, thank you all for joining on the call and thank you to all TripAdvisor employees for your hard work in 2015. I am very thankful to be able to work with such a great team. 2016 is another important year for our business and we are moving quickly to deliver the best user experience in travel. Thanks all and talk to you soon.